Vanguard Natural Resources to use excess cash to pay down revolver

By Lisa Kerner

Charlotte, N.C., March 7 – Vanguard Natural Resources, LLC expects to use more than $145 million of excess cash flow in 2016 to pay down borrowings under its credit facility, according to executive vice president and chief financial Richard Robert.

“A lower commodity price environment must be met with lower debt,” Robert said during Vanguard’s fourth-quarter earnings conference call on Monday.

Vanguard had $1.68 billion outstanding on its revolver and a debt-to-EBITDA ratio of 4.3 times at year’s end.

Subsequent to year’s end, Vanguard completed a debt exchange, reducing its overall debt by $92 million.

The Houston-based oil and gas exploration and development company’s current liquidity of $100 million includes $10 million of cash, according to Robert.

Robert said he expects a “significant” reduction in the $1.8 billion revolver borrowing base at the spring redetermination. However, Vanguard is planning to sell the Scoop/Stack assets acquired in the Eagle Rock merger to offset the anticipated reduction.

Liquidity is expected to be lower in 2016, but Robert said Vanguard does not require liquidity to fund its daily operations.

Vanguard had $65 million of distributable cash flow for the fourth quarter and $165 million for the full year.

The company had a net loss of $4.02 per basic unit for the quarter and a net loss of $19.80 per basic unit for 2015.

President and chief executive officer Scott Smith said that 2015 was a good year for acquisitions and that Vanguard ended the year strong.

The closing of two mergers in 2015 resulted in a 30% increase in production and hedging improvements, Smith said.

Vanguard has deferred some projects until commodity prices improve. During 2015, the company’s capital spending totaled $113 million. Smith expects 2016 capex to be 45% less, or about $63 million, with 40% of the total to be spent on Pinedale drilling and completion.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.